One of the biggest mistakes investors make with their Tax-Free Savings Account (TFSA) is treating it like a simple savings account instead of the wealth-building machine it can actually become.
Contrary to its name, the TFSA isn’t just a savings account where you park cash. It’s one of the most powerful tools Canadians have to build long-term wealth. Taxes are the biggest drag on a portfolio’s growth over the long term. So, the fact that every dollar of capital gains and dividend income generated inside a TFSA is tax-free creates a significant opportunity for Canadians.
That’s why how you use your TFSA matters so much. If you simply hold cash or low-yield investments, you’re limiting the potential of the account. However, if you invest in high-quality businesses that generate steady income and consistently grow over time, you can turn even a modest $10,000 into something much more meaningful over the years.
The key is finding stocks that offer two things at once: reliable income today and long-term growth potential. That way, you’re not just waiting for appreciation. You’re getting paid to wait and sit patiently.
So, if you’ve got $10,000 or any cash that you’re looking to contribute to your TFSA and put to work in the market, here’s why Brookfield Renewable Partners (TSX:BEP.UN) and Granite REIT (TSX:GRT.UN) are two top picks.
Both offer investors attractive yields, operate high-quality, essential businesses, and they each have long-term growth tailwinds that make them ideal core holdings inside a TFSA.
Source: Getty Images
Brookfield is a top green energy pick for your TFSA
There’s no question that one of the best industries to invest in for decades of growth is renewable energy. The world is on the verge of a significant, decades-long transition to cleaner energy, creating a ton of opportunity for investors.
And not only is Brookfield Renewable Partners perfectly positioned to capitalize on this opportunity, but it’s also one of the largest publicly traded renewable power platforms in the world.
It owns hydroelectric, wind, solar, and storage assets across North America, South America, Europe, and Asia. That diversification alone helps make the business highly resilient. However, what really makes Brookfield a reliable stock to buy and hold for the long haul is the structure of its cash flow.
For example, most of Brookfield Renewable’s power generation is contracted under long-term agreements with utilities and large corporations. That creates predictable revenue, even when energy markets fluctuate.
Furthermore, in addition to the compelling long-term growth potential that Brookfield offers TFSA investors, the stock also pays a dividend with a current yield of more than 4.8%. And that dividend is consistently being increased by Brookfield.
So, if you’re looking for reliable, high-quality stocks to buy in your TFSA and hold for years, Brookfield Renewable Partners is easily a top pick.
A top dividend-growth stock in the real estate sector
In addition to Brookfield, Granite REIT is another no-brainer TFSA stock, especially for investors who want a mix of stability and growth.
Granite owns industrial properties such as logistics and distribution facilities. These are the types of properties that benefit from e-commerce growth, supply chain expansion, and increased demand for warehousing space, which is what’s allowed Granite to grow so rapidly in recent years.
Furthermore, Granite also has a high-quality tenant base and a strong balance sheet, which only adds to the REIT’s resiliency.
Furthermore, that strong financial position allows it to continue developing new properties and expanding its footprint across North America and Europe to keep up with the growing demand for warehouse space.
Plus, like Brookfield, Granite also offers a sustainable and attractive dividend. In fact, with the stock trading below $90 a share, the REIT still offers a yield of roughly 3.9%.
So, if you’re looking for high-quality Canadian stocks to buy now that can help power the growth of your TFSA for years to come, I’d consider these two stocks soon, before they continue to get any more expensive.
